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Citibank is initiating moves to take over Israel's Mizrahi Bank, a source close to the negotiations told

The contacts with Mizrahi's controlling shareholders, the Ofer family, the Wertheim family and Abe Feinberg have not yet matured to the state of actual negotiations, the source added.

Citibank reportedly wants to acquire the entire 52% equity stake held by the controlling shareholders.

Mizrahi's market cap today stands at $575 million. At the end of 2000, its equity stood at $860 million. Citibank parent Citigroup's market cap on Wall Street is $196 billion.

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If the talks turn into reality, Citibank would become the first foreign bank to take over an Israeli bank.

A spokesman for the Ofer brothers refused to comment. A source at Citibank called the report pure speculation, Reuters reported.